Meta pulls controversial AI photo feature after week of rapid launches

Meta Platforms ↘ 0.98% shares surged over the past week, climbing from around $595 in late June to nearly $670 by Friday, as a flurry of artificial intelligence announcements fueled investor enthusiasm. The gains came after the company launched two new AI models and revealed plans to begin manufacturing its first in-house AI chip in September.

A Week of AI Announcements

On Tuesday, July 7, Meta rolled out Muse Image, its first image-generation model from Meta Superintelligence Labs, making it available through the Meta AI app, Instagram Stories, and WhatsApp. The model, internally code-named Mango, can interpret complex prompts, use photos as inputs, and let users edit generated images through sketches or annotations.techcrunch+1

Two days later, the company debuted Muse Spark 1.1, a multimodal AI model built for agentic coding and workflow automation. The release marked Meta's first paid AI model offering, priced at $1.25 per million input tokens and $4.25 per million output tokens. According to The New York Times, Meta said the model performs comparably to top offerings from Anthropic, OpenAI, and Google across writing, reasoning, and coding benchmarks.nytimes+2

CEO Mark Zuckerberg posted about the Spark release on X — his first post on the platform in three years — describing it as a strong, low-cost agentic model.theaiinsider

Custom Chip Signals Hardware Ambitions

Also on July 9, Reuters reported that Meta plans to begin manufacturing an in-house AI chip code-named "Iris" in September, according to an internal memo. The chip is part of Meta's four-generation Meta Training and Inference Accelerator program, developed with Broadcom ↗ 0.42% and manufactured by TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 0.53%.reuters+2

Meta plans to deploy seven gigawatts of computing infrastructure this year and double that to 14 gigawatts in 2027, the memo showed. The company intends to release a new chip roughly every six months through 2027, a pace far faster than industry norms.cnbc+1

Market Response

The stock received an additional boost from reports that Meta is building a cloud infrastructure business called Meta Compute, positioning it against Amazon Web Services, Microsoft Azure, and Google Cloud. On Friday alone, shares rose nearly 6%. The week's gains reflected growing confidence that Meta's AI investments — which the company has said will amount to tens of billions of dollars this year — are translating into competitive products and new revenue streams.stockstotrade+2

However, the week was not without controversy. Meta pulled a Muse Image feature that allowed users to generate AI images using other people's public Instagram photos without notification, after public backlash.deadline